Image by Francesco Coia

Opinion

What are the impacts of AI on luxury brands?

By Kai Loyens

Opinion

What are the impacts of AI on luxury brands?

Mar 20, 2019

Fashion

Mar 20, 2019

The debate on the impacts of artificial intelligence has largely focused on how this new technology and associated automation processes will affect legacy industries. In the meantime, creative industries have widely been shielded from debates about the impacts of nascent AI technologies, due to the primacy of creative processes that are hard to quantify into AI inputs.

These concerns have been most acutely raised in relation to the luxury industry. While this industry and its dominant players have been painfully slow to embrace new technologies in the past, namely e-commerce, they are quickly understanding the opportunity and threat posed by AI and new technologies. However, their rapid embrace of this new technology has raised questions about whether the industry truly understands AI’s long-term impact on the perception of luxury.

Implementing AI into business processes and marketing may be of significant benefit to the luxury industry, but it may also threaten what makes them unique, which in the past has been a singular focus on creative expression and design.

‘Sneakerisation’ is emblematic of luxury’s uptake of AI and how analytics technologies uncover new trends and scale-up growth. Analytics has been used to identify trends in web searches and social media engagement, sneakers being the first major success for the luxury industry with this approach. This has seen luxury companies scale up their investment in ‘streetwear’ to capitalise on these trends, leading to soaring revenues and stock prices. However, it does raise questions about whether companies and brands that are singularly associated with creativity and skill are undermining their own images through such a homogenous focus.

Skilled artisan labour is complementary to any discussion about new technologies and the luxury industry. Craftsmanship and the story of labour is still central to this industry, and AI poses a potential risk to this highly symbiotic relationship.

Gucci, one of the most prolific names in luxury at the moment, has been seen as a leader in experimenting with new technologies. CEO Marco Bizzarri has estimated that up to 40 percent of its production could be automated or have some level of automation introduced. It has led the way on automation investment and development, with its latest sneakers now being assembled mostly by robotic systems. Such a rapid uptake of these new technologies poses the most visible risk to the image and popular conception of these companies and their future prospects—mainly that they are seeking to cut costs and are losing their heritage in skilled labour. If the production of products that were traditionally handcrafted can be automated, why can’t designs, motifs and conceptual processes also be handled by increasingly intelligent AI processes?

This is a significant shift for an industry that still strongly promotes its links to artisanal manufacturing, with many of these processes remaining integral to their production processes. Brand still commands much of the appeal in luxury, but as brands increasingly position themselves further upmarket, they risk alienating themselves from their own images and from the clients they are trying to reach.

These new opportunities for the industry have been repeatedly emphasised as a threat by Johan Rupert, chairman of luxury conglomerate Richemont, who has argued that the use of analytics to identify new trends, automation and AI processes will be creatively destructive for the industry. Somewhat ironically, he also views the luxury industry as being a strong symbol of gaping global economic inequality.

Speaking earlier to the use of analytics and AI to identify new trends and reposition businesses, Rupert is also largely alone amongst luxury executives in believing that this can only bring short-term benefits. It is not difficult to extrapolate on the use of analytics and its integration with AI to see companies use this technology to inform collection design, visuals, and circumvent many traditional aspects of the design process.

Like many industries, luxury finds itself amidst something of a reckoning. To stay naive of the benefits and impacts of future technologies, as it has in the past, would be of significant detriment to the industry, but to embrace these digital tools with greater zeal also raises risks. For creative and luxury industries as a whole, technology and new applications for AI processes are likely to reshape an industry that has long been apprehensive of disruption. However, given that luxury is at the forefront of brand consciousness and trying to broaden its appeal, new technologies also pose a serious risk to continuing conceptions of exclusivity and craftsmanship.

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Fashion

Gucci is integrating AI within its supply chains and stores to reduce waste

By Audrey Popa

Jun 11, 2019

France recently received waves of congratulations on social media for moving to ban the destruction of unsold luxury goods within the country. With Paris aiming to be the world’s capital of sustainable fashion by 2024, it seems natural that they’ve now begun cracking down on the industry’s harmful practices.

As a widespread practice within the luxury sector in the country, it is estimated that more than $730 million dollars of returns and unsold inventory were routinely destroyed by retailers in France. The reason? For brands to maintain a sense of luxurious mystic and exclusivity. Much of this wastefulness, unfortunately, was due to an inability for fashion houses to quantify the demand for luxurious goods within the volatile industry they operate in.

As the world shifts its focus on each and every industry, and their unsustainable practices, the fashion sector itself has seen much of the backlash in terms of environmental action. The age of fast fashion has defined our generation, with an H&M around every block, providing racks of new items just days after similar trends have aired on the runway. The fashion industry in recent years has been almost characterised by its wastefulness, with a demand from consumers for sustainable products being a brand new concept. In the midst of all the chaos, one of my favourite proposed solutions aimed at helping luxury brands lower their environmental impact is the integration of AI within supply chains and stores. Which brand is possibly forging a solution to lead within this space? Gucci.

Typically, when looking at technology within the fashion industry, brands have been slow to adopt the newest gadgets and gizmos. Though the fashion industry is large and all-powerful, its size and seniority makes it hard to adapt, especially when looking at new operational practices. This slow adoption has hurt many, with 2017 having been the worst year on record for brick-and-mortar retail stores, with an estimated 6,985 stores closing across the U.S. that year alone.

Fashion’s inability to harness the potential in technology has hurt their bottom line, their attractiveness, and, most importantly, their impact on the planet. So what is the future of fashion? The management consulting company McKinsey has stated that proper AI integration can help reduce forecasting errors up to 50 percent, resulting in an overall inventory reduction for companies between 20 to 50 percent, an attractive and cost-effective opportunity.

Kering, an international luxury company based in Paris, is looking to be the first to aggressively push for the integration of AI within the industry. The company owns luxury goods brands, such as Gucci, Balenciaga, and Yves Saint Laurent. Kering is hoping to utilise the promised power of artificial intelligence to help brands decide on where to send new products, with Gucci being the first within the group to integrate such technologies. The technology will also be used on the sales floor, providing sales assistants with mobile applications to help increase sales by providing real-time information on available colours and sizes, as well as full access to client’s past purchases, and ultimately collect data points.

With brands like Gucci hoping to grow at twice the rate of the luxury sector standard this year, the use of artificial intelligence can prove to be a new competitive advantage for companies looking for aggressive growth. With every data point having the potential to unlock consumer trends on both a personal, regional, and national level, the value of collecting consumer data is evident. The Age of Information has shown the profit in collecting, analysing and summarising consumer data. Utilising this information to substantially reduce an international fashion brand’s impact on the planet is just the kind of solutions needed in this dire time.

The trend towards sustainability has been raved about in recent years, with searches for ‘sustainable fashion’ having said to increase by 66 percent in 2018. But as with many trends, consumers must be wary of what they are actually buying, and what products and practices are truly sustainable. Many products take advantage of marketing opportunities by ‘greenwashing,’ using ‘eco-friendly’ terms purely for marketing needs. Real change won’t come in the form of just stickers and logos on products, but systematic changes to how an industry as a whole operates.

Though trends within the fashion industry are hard to call too early on, Gucci’s steps to integrating artificial intelligence is exactly the direction luxury brands should all be marching towards. Creating a more sustainable supply chain, through better understanding consumers, is not only better for any company, but better for the planet as well.

Opinion